Bangladeshi startups Pathao, SureCash hold merger talks, sources say

Ride-hailing startup Pathao and fintech firm SureCash in Bangladesh have entered into discussions of a merger, local media reported, citing sources familiar with the matter.

Photo credit: Pathao

If approved by their respective boards, the merged entity would be in a better position to attract funding and offer more services to a wider audience. The two companies, however, will continue to operate independently from each other after the transaction, the sources added.

Tech in Asia has reached out to Pathao for a statement but has not received a response yet.

The development seems to cap off a difficult year for the Gojek-backed Pathao. Back in May, the four-year-old startup said it expects to close its series B raise at up to US$50 million, but there wasn’t an official announcement.

After one month, it was reported that Pathao underwent “a massive downsizing” due to investors backing out from the investment round. A former employee told Tech in Asia that they were forced to resign along with about half of Pathao’s team of approximately 600 people at the time.

Speaking to Tech in Asia, Pathao co-founder and CEO Hussain Elius denied that any investor has decided to pull out of the investment round. He confirmed, however, that there had been layoffs, without giving exact numbers.

To turn things around, the company has decided to combine its rides, food, and fulfillment units into a single core operations team under its restructuring initiative aimed at bringing down costs. It also planned to redirect resources to other verticals such as ecommerce and digital payments.

SureCash, a local digital payments player, has about 2 million customers and 1,000 payment partners on its platform. It is currently facing stiff competition in the space, which includes Alibaba-backed bKash.

According to the report, talks between Pathao and SureCash are still in the early stages, so it is yet unclear if a deal will materialize.